Changes in legislation – Summer/Autumn 2021

State Cadastral Registration and State Registration of Real Estate

Major changes in the state registration of real estate

For more detail see one of our past alerts.

Procedure for deregistration of objects that have ceased to exist simplified

Rosreestr developed Order P/0217 of 24 May 2021 “On establishing the form and scope of information of the inspection act and requirements for preparing it” (hereinafter “Order P/0217“), which takes effect after Ministry of Economic Development of Russia Order No. 861 of 20 November 2015 “On approving the form and scope of information of the inspection act and requirements for preparing it” is repealed.

In particular, Order P/0217 requires that certain documents from a set list be attached to the inspection act only if they are available (e.g., a decision of a state body declaring a building unsafe and subject to demolition, a decision on integrated development of the territory where the facility is located, a decision to demolish unauthorised construction, and other documents). Thus, the absence of such documents will not be a violation of the requirements for preparing the inspection act and it can be prepared without them.

In practice, this innovation will make it considerably easier for title holders to remove facilities that have ceased to exist from the cadastral register. Often, they may have ceased to exist long before the inspection act was prepared.

Viticulture introduced as a new type of permitted use of land plots

On 8 October 2021 the classifier of permitted uses of land plots^[1] gained a new type of permitted use (TPU): “viticulture”, involving activities for cultivation of grapes on land suitable for growing vines (code 1.5.1)[2].

Thus, it will be impossible to do construction or grow other crops on land plots with the “viticulture” TPU. Notably, vineyard land used to have the permitted use of “horticulture”.

Real estate register extracts to contain information about a house being declared unsafe

On 1 February 2022 amendments relating to certain information about real estate will got into effect. An extract containing publicly available information from the Real Estate Register (EGRN) will now state whether an apartment building has been declared unsafe and subject to demolition or reconstruction and/or whether residential premises, including residential buildings, have been declared uninhabitable[3].

Now that information about whether housing is unsafe will be publicly available, both residents and potential buyers will be more aware of a building’s condition.

Rosreestr Guidance

Correction of errors in EGRN information[4]

According to Rosreestr’s guidance, errors can be:

• technical errors (clerical errors, misprints that lead to inconsistency between the data in the EGRN and the information contained in the documents on whose basis the cadastral registration and registration of rights were carried out);
• registry errors (errors that are contained in the boundary or technical plan, territory map or inspection act, arising in particular due to errors made by the person who carried out the cadastral work).

In order to correct a technical error, an application needs to be submitted to Rosreestr. A technical error will be corrected within three business days of when the application is received.

In order to correct a registry error, the application to correct the error should be accompanied by documents confirming the error and containing the accurate information for the correction, or a court decision. A registry error will be corrected within five business days of when the application and enclosed documents submitted to Rosreestr are received.

It is important to note that technical and registry errors are corrected only if the correction does not entail the emergence, termination or transfer of ownership rights to real estate.

Cadastral registration of amendments due to reconstruction of parts of linear facilities

According to the procedure for keeping the EGRN[5], when describing the location of a structure undergoing reconstruction, e.g., when part of a linear facility is relocated, due to the seizure of land plots on which it was previously located for state needs or demolition of part of the linear facility, the coordinates of characteristic points of the outline of that part of the linear facility may be listed.

Rosreestr has provided the following guidance.[6] If the EGRN does not contain information about the outline of the linear facility, then information only about the description of the location of the reconstructed (relocated) part of the linear facility may be indicated, with a corresponding indication in the technical plan that the description of the linear facility’s location is determined only in relation to its reconstructed (relocated) part.

If the outline of a linear facility is established and the EGRN contains information about the coordinates of characteristic points of the facility’s outline, then the technical plan must contain information about all coordinates of characteristic points of the outline of the linear facility, taking into account the defined coordinates of the outline of the reconstructed section of the linear facility.

Requirement to submit acts of approval of the location of land plot boundaries to the registration authority abolished

Rosreestr set out guidance in its Letter No. 13/1-00145/21 of 14 May 2021 according to which cadastral engineers no longer have an obligation to deliver acts of approval of the location of land plot boundaries to the registration authority. Such approvals are prepared when cadastral surveys are done but, since 30 April  2021, will no longer be submitted to the registration authority regardless of the date the land plot was registered in the cadastre.

Changing the type of real estate property from “premises” to “parking space”

According to Rosreestr’s guidance published in Letter No. 14-4114-GE/21 dated 2 June 2021, the type of real estate can be changed from “premises” (designated as “non-residential”, i.e., commercial) to “parking space” without the title holder submitting an application for registration, provided all of the following conditions are met:

• the real estate has the attributes (characteristics) of a parking space;
• the real estate was registered in the cadastral register through 1 January 2017;
• the EGRN contains the following information about the real estate: (1) its type as premises, (2) and the purpose as non-residential;
• the technical plan submitted for the cadastral registration of the real estate states that the technical plan has been prepared for a property that is a parking space.

Rosreestr makes the change on its own as part of a policy for improving the quality of data on real estate contained in the EGRN.

Integrated Development

Rules for holding tenders for the right to conclude an integrated development agreement approved

A new set of rules entered into effect on 22 May 2021. They include rules for holding tenders for the right to conclude an integrated development agreement (hereinafter respectively, the “Rules” and the “Tender“), rules for determining the initial price of a Tender, and the rules for holding an electronic Tender[7].

The Rules regulate the following issues in detail:

• the procedure for notification of the Tender;
• determination of the competitive terms specified in the decision to hold a Tender;
• the procedure for refusal to hold a Tender;
• an exhaustive list of documents to be submitted by a bidder;
• the procedure for submitting bids;
• the grounds for refusing to allow a bidder to participate in a Tender;
• the procedure for determining the winner of the Tender;
• other issues.

The Rules also stipulate that the organiser of the Tender is an authorised federal executive authority/ government authority of a constituent entity of the Russian Federation/local government, or an organisation acting on the basis of an agreement with them.

To participate in an electronic Tender, legal entities must be registered as tender participants in the unified procurement information system and be accredited on the electronic platform.

Сhanges to the rules for approving the inclusion of land plots for the construction of public utilities, transport and social infrastructure within integrated development

Title holders used to submit area planning documentation to get approval to include something within integrated development. Now, according to amendments adopted in 2021[8], they submit a drawing or drawings of the planning to be included in the main part of the site plan for the area where the title holders intend to do integrated development, and the land survey drawings to be included in the main part of the boundary plan for the area[9].

Cases of subsidies for those who have entered into integrated residential development agreements defined

A Russian law has long provided subsidies for integrated development. Article 16(6)(4) of Federal Law No. 185-FZ of 21 July 2007 “On the Housing and Utility Reform Fund ” (hereinafter the “Fund“) states that public monies received from the Fund may be spent, e.g., on providing subsidies at the rate of 25% to 100% of the standard relocation cost to persons who have concluded integrated development agreements for housing. The subsidies reimburse costs incurred to perform the obligations (1) of creating or purchasing residential premises to provide to individuals relocated from the unsafe housing, (2) of transferring the residential premises to state or municipal ownership, (3) of paying compensation for residential premises in apartment buildings declared unsafe and subject to demolition/reconstruction when they are taken away to carry out an integrated development decision (hereinafter referred to as “Subsidies“).

Now a Russian Government Decree[10] which came into force on 12 June 2021 stipulates that Subsidies shall be granted in cases when Russian Federation constituent entities where the areas slated for integrated development are located apply to the Fund. The integrated development should include:

• apartment buildings declared unsafe and subject to demolition/reconstruction before 1 January 2017;
• apartment buildings declared unsafe and subject to demolition/reconstruction after 1 January 2017;
• apartment buildings not declared unsafe and subject to demolition/reconstruction and that meet the criteria established by a legal act of the Russian Federation constituent entity;
• residential blocks of flats and private houses that meet the criteria set by the Russian Federation constituent entity characterising their high level of wear and tear, inadequate technical condition or lack of utility systems.

The application should also contain a calculation of the Subsidy amount based on the formulas in the appendix to the Russian Government Decree.

Construction

New list of national standards and sets of rules to ensure mandatory construction requirements adopted

Between 1 September 2021 and 1 September 2027 there will be a new List of national standards and sets of rules whose mandatory application will ensure compliance with the requirements of the Federal Law “Technical Regulations on the Safety of Buildings and Structures”[11] (hereinafter the “List“). The List replaces a similar existing list[12].

The new List is much shorter and an improvement over the previous version. In particular, some provisions duplicating fire safety requirements, the voluntary application of which ensures compliance with fire safety requirements, have been removed. Also, some provisions requiring additional approvals for urban planning and design documentation not required by the Urban Planning Code of the Russian Federation have been omitted.

Some safety requirements that limit the use of new efficient materials and designs, as well as requirements that are advisory in nature have also been abbreviated.

Changes in the uses of land plots in airport environs

Amendments[13] concerning how land plots in airport environs are used when construction work is done on the land plots entered into force on 1 July 2021. The amendments provide, in particular, for the following:

• it has been clarified that restrictions on the use of real estate and activities in the seventh subzone of the airport environs are set to prevent negative physical impact, i.e., the equivalent sound level from aircraft flights failing to comply with sanitary and epidemiological requirements;
• information has been added that the airport environs are set with subzones one through seven, or with subzones one to six and a seventh subzone being added later;
• information has been added that if airport environs have been set with the first to sixth subzones of the airport environs being allocated before the seventh subzone is set, land plots can be used if there is a sanitary and epidemiological inspection report from the federal executive authority performing sanitary and epidemiological supervision;
• information has been added that the list of restrictions on the use of land plots providing for a ban on construction, reconstruction or operation of certain types of capital construction in the seventh subzone of airport environs is determined considering the possibility of taking measures to prevent and/or eliminate negative physical impact during construction, reconstruction and operation of those structures and based on a risk assessment for human health done in accordance with sanitary-epidemiological requirements;
• information has been added that buildings or structures that do not comply with the restrictions in the subzones of the airport environs (except for buildings/structures for which it has been decided to demolish unauthorised construction or to bring it into compliance with legal requirements and such decisions have not been revoked) cannot be demolished if the buildings or structures were built before the subzones were established and are located on land intended for private farming, gardening for individuals’ own needs, private housing construction, and construction of private garages (provided that their siting complies with land use regulations and the land plot’s permitted use).

Changes in how utility connection technical conditions are obtained

Russia’s Urban Planning Code saw new provisions go into effect on 1 September 2021[14]. The provisions cover the procedure of obtaining technical conditions to connect capital construction facilities to utility systems[15].

Technical conditions are issued to enter into a contract to connect utilities. They are issued at the request of the title holder of the real estate, or a person who has been issued a construction permit, or a person with whom an integrated development agreement has been concluded.

The new procedure for obtaining technical conditions involves the following:

• technical conditions will be issued once within seven business days of the request[16] (previously “preliminary” technical conditions were issued, then “subsequent” technical conditions were issued when the connection contract was actually concluded);
• technical conditions will be determined by the rules for connecting to utility systems approved by the Russian government, and will be mandatory attachments to the contracts for connecting capital construction facilities to utility networks[17] (previously, technical conditions only had to contain information on the maximum load, when the connection would be done, and how long the technical conditions would be valid);
• technical requirements and conditions may not be valid for less than two years from the date of their issuance (previously it was provided that technical conditions were invalid if the interested party failed to submit an application for connection within one year, or three years for integrated development).

These changes do not apply to connection to heat, gas, water and wastewater systems on the basis of technical conditions issued before 1 September 2021.

Traffic management plans no longer required in design documentation

To improve construction procedures and to cut design documentation approval times and how long it takes to get construction permits, amendments effective 22 June 2021[18] state that traffic management plans no longer need to be included in design documentation for capital construction facilities.

So, planners no longer need to factor in the installation of road signs, cameras and traffic lights, or markings in advance.

Ministry of Construction advises of recommended indices of change in the estimated cost of construction in Q3 of 2021

In its Letter No. 34475-IF/09 of 17 August  2021 “On the indices of change in the estimated cost of construction in Q3 of 2021”, the Ministry of Construction advised of recommended indices of change in the estimated cost of construction in the third quarter of 2021. The Letter covers the estimated costs of construction and installation and commissioning works for the construction of apartment buildings, educational, health, sports, cultural and other facilities in certain regions of Russia.

The Ministry of Construction monitors prices of construction resources.[19] In doing so, it checks information on the prices of construction resources and supporting documents, and calculates the indices of change in the cost of construction for the relevant period according to the established methodology.

Guidance on the performance of obligations under construction contracts concluded with persons who are not members of a self-regulating organisation (SRO)

The Ministry of Construction has provided guidance in Letter No. 24024-TB/02 of 10 June 2021. If the subject of the contract is the performance of engineering survey work, the preparation of design documentation, and the construction, reconstruction, or major repair of capital  construction facilities, the person performing the works must simultaneously be a member of three self-regulating organisations: (1) in the field of engineering surveys, (2) in the field of architectural and construction design, and (3) in the field of construction, reconstruction, overhaul, and demolition of capital  construction facilities.

If a person who does not meet the established requirements is engaged under a contract, there is a risk that damage caused by the SRO member failing to perform or improperly performing obligations under the contract will not be reimbursed. There is also a risk that a recourse claim cannot be made for damage caused by that person’s work against the SRO of which it or he is a member.

Other

Criteria set for distinguishing between movable and immovable property for tax purposes

Pursuant to Federal Tax Service of Russia Letter No. BS-4-21/15939@ of 15 November 2021 “On the criteria for distinguishing between movable and immovable property in order to apply Chapter 30 of the Tax Code”, two important factors determine whether movable property has been legitimately exempted from taxation. First, whether the fixed assets were movable property at the time of acquisition and, second, whether they were legitimately entered in the books as separate inventory items.

The civil-law criteria themselves (of the asset being firmly attached to the land, it being impossible to divide an asset in kind without destroying or damaging it or changing its purpose, as well as the assets being connected to be used for a common purpose) do not make it possible to clearly decide whether taxpayers are entitled to the benefit. This is because they don’t distinguish between investments in the renovation of production equipment and the creation of non-permanent structures from investments in the creation (improvement) of real estate, i.e., buildings and structures.

Whether or not there is information about the fixed assets in the EGRN has evidentiary value for the purposes of the Tax Code provisions on tax exemption (Article 374(4)(8) and Article 281(25) of the Tax Code). However, it also cannot be used as an absolute criterion for assessing the legality of benefits.

Procedure approved for declaring apartment buildings of limited serviceability

Order No. 610/pr of the Ministry of Construction of Russia of 26 August 2021 “On establishing the procedure for declaring apartment buildings of limited serviceability” (hereinafter “Order No. 610/pr“) came into force on 12 October 2021.

Order No. 610/pr bases the determination of an apartment building’s limited serviceability on the following: if an organisation or individual entrepreneur who is a SRO member finds that part of or entire apartment building is in such a state. At the same time, there is no danger of sudden failure, collapse or toppling, and the apartment building’s structures can function and the building can operate either if its condition is monitored, or if the necessary steps are taken to strengthen the structures and then monitor the building’s condition.

Order No. 610/pr establishes the procedure for creating a special interdepartmental commission and how it carries out its activity. It also specifies how an apartment building inspection report should be prepared.

Reforming corporate property tax

Some amendments to the Tax Code of the Russian Federation will come into force on 1 January 2023[20]. As of that date, Russian corporate taxpayers will no longer include in their tax returns information about taxable items for which the tax base is determined as their cadastral value. No return is filed if the taxpayer only had such taxable items in the tax period ended.

Public Procurement

Extension of support measures for the construction industry due to increased prices of construction resources

Amendments that entered into force on 9 November 2021[21] permit the price of a public contract concluded before 1 October 2021 to be changed (increased). This can be done if the change in the essential conditions of the public contract stays within the budgetary commitments and does not increase the duration or price of the contract by more than 30%.

Procedure for determining the estimated cost of publicly-funded works clarified

A letter from the Main Department for State Expertise Federal Autonomous Institution clarifies the procedure as follows. According to Letter No. 01-01-17/13107-SL of 27 August 2021, if there are no estimate standards for repair and construction works when determining the estimated cost of overhaul works that are similar to the work processes done in new construction and using the estimate standards for construction works to which multiplying factors that take into account the increased labour costs are applied, the coefficients of 0.9 and 0.85, respectively, are applied to the standards of overhead and estimated profit for the respective works.

St. Petersburg / Moscow

Boundaries and subject of protection of the St. Petersburg historic settlement of federal significance approved in St. Petersburg

Order No. 1295 of the Ministry of Culture of Russia of 30 October 2020 “On approval of the subject of protection, the boundaries of the territory and the requirements for urban planning regulations within the St. Petersburg historic settlement of federal significance” (hereinafter “Order 1295“) came into force on 27 June 2021.

St. Petersburg was assigned the status of historic settlement of federal significance more than 10 years ago. However, the boundaries of the historic settlement were not defined until Order 1295 was adopted last summer.

Order 1295 largely duplicates the provisions of the currently effective Law of St. Petersburg No. 820-7 of 19 January 2009  “On the boundaries of the consolidated zones of protection of cultural heritage sites located within the territory of St. Petersburg, land use regulations and the requirements to the urban planning regulations within the boundaries of the zones” (hereinafter “Law 820-7“). The boundaries of the historic settlement of St. Petersburg in Order 1295 coincide with the boundaries of the protection zones of the central districts established by Law 820-7 and encompass the city centre from Bolshaya Nevka to Obvodny Canal.

As for the historic suburbs of Pushkin, Peterhof, and Kronstadt, they have not been included within the historic settlement of St. Petersburg despite their historical value and actively developing construction. However, there are plans to turn them into separate historic settlements in the future.

Many elements of St. Petersburg are protected. The historic settlement’s subject of protection (predmet okhrany) includes not only the cultural heritage sites themselves (e.g., monuments and ensembles) and historic buildings that are not cultural heritage sites, but also compositional and visual connections (panoramas), views of the urban landscape and main visual directions (for example, the panorama of the Neva River basin, the view of the Peter and Paul Cathedral from the Birzhevoy descent on the Neva River, the view of Palace Square and the Winter Palace from the General Staff Building, the 360-degree panoramic view from the colonnade of St. Isaac’s Cathedral, etc.).

Consistent with the adopted Order 1295, the approved boundaries of the historic settlement of the city of St. Petersburg should be reflected in the land use and development rules, and special urban planning regulations should be developed for zones located within the boundaries of the historic settlement.

It is expected that the relevant draft decree on amendments to the land use and development rules will be prepared by the Committee on Urban Planning and Architecture of St. Petersburg by 10 October 2022.

As a reminder, the land use and development rules were last amended at the beginning of the year. You can read more about those amendments in our past alert.

For construction or reconstruction in St. Petersburg, a conclusion must be obtained from the Committee on State Control, Use and Protection of Monuments of History and Culture that the architectural solution contained in the design documentation is consistent with the subject of protection of the historic settlement

New Administrative Regulations of the Committee on State Control, Use and Protection of Monuments of History and Culture went into effect on 10 September 2021. They deal with consideration of the section of the design documentation for a capital construction facility containing architectural solutions. They also require that a conclusion be sent to the developer/technical customer as to whether that section is or is not consistent with the historic settlement’s subject of protection and whether it complies the requirements of the urban planning regulations for the territorial zone located within the boundaries of the historic settlement[22].

This latest procedure (for approving the section of the design documentation containing the architectural solution with the Committee on State Control, Use and Protection of Monuments of History and Culture) supplements two existing procedures: one for getting the architectural and urban-planning appearance of real estate approved by the Committee on Urban Planning and Architecture, and another for obtaining a conclusion from the Committee on State Control, Use and Protection of Monuments of History and Culture that the requirements for construction in cultural heritage site protection zones have been met.

Procedure for getting the architectural and construction appearance of a property approved by the Committee on Urban Planning and Architecture changed in St. Petersburg

Since September 2021, St. Petersburg has had a new procedure for granting a decision of the Committee on Urban Planning and Architecture approving the architectural and urban-planning appearance of residential and non-residential properties[23] (hereinafter the “Procedure“). The Procedure comes with new administrative regulations for providing that public service[24].

The key changes in the Procedure involve the following:

• the criteria for determining whether architectural and construction materials are or are not consistent with the architectural appearance of St. Petersburg have been clarified;
• it is now possible to submit the architectural and construction appearance of a property for reapproval within not more than 10 business days, if a decision approving it has already been issued but the façade materials have changed;
• the decision approving the architectural and construction appearance of a property is now valid until the property has been demolished.

Changes in how the destruction of city property in St. Petersburg is regulated

Changes to the procedure for destruction of property owned by the government of St. Petersburg came into force on 6 August 2021[25].

One of the changes is that it is now a priority to decide whether St. Petersburg’s property can continue to be used before destroying it.

Abandoned or unclaimed non-residential buildings or structures and incomplete construction have been added to the list of St. Petersburg real estate that can be destroyed.

Notably, the above procedure for destroying St. Petersburg city property does not apply to the demolition of city-owned cultural heritage sites and historic buildings.

Amendments to the law on green areas in St. Petersburg

Amendments to regulation related to the placement, use, reproduction, maintenance and recording of green areas in St. Petersburg came into force on 20 August 2021[26].

One clarification is that land plots cannot be granted for siting capital construction facilities and temporary facilities within public green areas, except for some construction of utility and transport infrastructure.

It is also prohibited to site improvements in public green areas. However, there are some exceptions, such as fences, urban sculptures, sports and children’s play equipment, street furniture, outdoor lighting fixtures and architectural lighting, design elements, street equipment (bicycle parking), and advertising structures.

St. Petersburg regulates the procedure for concluding an integrated development agreement

Law of St. Petersburg No. 414-100 of 3 September 2021 “On the procedure for entering into an agreement for integrated development at the initiative of title holders of land plots and/or real estate located on them” (hereinafter “Law 414-100“) will come into force on 31 December 2021.

The decision to enter into an agreement is made within 60 business days of when the competent government authority receives the title holder’s application with attached materials. An integrated development agreement is concluded without holding a tender on the basis of a decision of the Government of St. Petersburg.

New support measures for the hospitality industry in St. Petersburg

On 18 October 2021 the Government of St. Petersburg approved draft Law of St. Petersburg No. 562-121 “On amendments to certain laws of St. Petersburg on taxes and duties”, which became effective on 25 November  2021 (hereinafter “Law No. 562-121“).

Law No. 562-121 provides for additional tax incentives, including for hospitality businesses. In particular, boarding houses with OKVED code 55.9 that provide accommodation services for guests are also included on the list of organisations exempt from property and land taxes. Organisations using the simplified taxation system still will be taxed at the rate of 1% for 2021.

Law No. 562-121 also provides that the tax benefit will apply to lessors letting out real estate of less than 500 square metres, but which together amounts to more than 1,000 square metres (previously it was from 500 square metres). This takes into account the business of hotels and health resorts operating in multiple properties located within the same land plot and providing a range of services.

Changes in the procedure for lifting a ban on construction/reconstruction on land plots in Moscow

Certain changes took effect in Moscow on 6 June 2021.[27] Now, the fee for lifting a ban on construction/reconstruction is not charged if a land plot’s permitted use based on urban planning regulations provides for not only scientific, commercial and industrial activities, but also for educational activities[28].

Moscow adopts instruction for approving the subject of protection of cultural sites

Order No. 400 of the Moscow City Heritage Committee “On approval of the Instruction for approving the subject of protection of federal and regional cultural heritage sites” (hereinafter the “Instruction“) came into force on 30 September 2021. The former order was repealed.

The Instruction contains the timeframes for, sequence and description of administrative procedures for decision-making on whether to approve or reject features of cultural heritage sites that are the basis for including them in the Uniform State Register of Cultural Heritage Sites (historical and cultural monuments) of the peoples of the Russian Federation and are subject to mandatory preservation.

New regulation for the maintenance and routine repair of common property in an apartment building approved in Moscow

A new regulation on the maintenance and routine repair of common property in an apartment building (hereinafter the “Regulation“)[29] entered into force on 8 July 2021 in Moscow. It replaces the now void regulations that had been in force since 2013[30].

The Regulation covers which organisational and technical works and services necessary to ensure proper maintenance and routine repair of common property in an apartment building should be performed and how this is done. This includes works to maintain elements, structures and in-house systems in good condition, to comply with the specified parameters and operating modes of equipment and technical systems.

Unlike the previous version of the Regulation, the new version provides, in particular, for twice yearly inspections of the foundation, walls, ceilings, roofs and other structural elements. Such inspections were carried out once a year under the previous version of the Regulation.

Court Practice

The position of the Constitutional Court of the Russian Federation on siting non-stationary retail facilities near houses

The Constitutional Court of the Russian Federation considered a complaint against a local government’s actions of banning the siting of non-stationary retail facilities near houses. In its Resolution No. 14-P of 19 April 2021 on the case the court ruled that:

• the provisions of federal law do not enable local government bodies to independently impose disproportionate restrictions on non-stationary retail near a house, thereby creating arbitrary obstacles to legitimate business activities and limiting the owner’s right to dispose of his property;
• the owners of premises in an apartment building have the right to provide their land plot (or part of it) to site non-stationary retail facilities, but the siting of those facilities should not violate the interests of other persons or contravene statutory regulations;
• as an additional (optional) type of land use, retail activity is possible only in addition to the main types of improvements to the area near a house that are specifically intended to meet individuals’ needs for housing and a comfortable living environment (landscaping, organisation of places for recreation, etc.), and cannot replace these types or hinder their implementation.

The Constitutional Court of the Russian Federation concluded that local government bodies are not authorised in their municipality improvement rules to absolutely ban the siting of non-stationary retail facilities on land plots on the grounds around an apartment building, if the owners of the plots have expressed consent to site such facilities and have complied with the mandatory requirements of Russian Federation laws.

The Constitutional Court has also clarified that the general meeting of owners of premises in an apartment building may decide to let out all or part of the area around the building to site a non-stationary retail facility provided that the land plot is properly formed. In other words, the dimensions of the plot and its boundaries have been determined and the plot has undergone state cadastral registration.

Russia’s Supreme Court rules on how to determine the duration of an indefinite mortgage

In Ruling No. 305-ES20-12714 of 15 April 2021, in the case of consideration of a claim for foreclosure on mortgaged immovable property (land plots), the Supreme Court notes:

• when the mortgagor is a third party, the provision of the Civil Code of the Russian Federation on suretyship applies to the relationship between the mortgagor, the debtor and the mortgagee, unless otherwise provided by law or an agreement between the relevant persons;
• pursuant to Article 367(6) of the Civil Code of the Russian Federation, the suretyship is terminated upon the expiration of the term specified in the suretyship agreement for which it is given. If no term is specified, then it is terminated provided that the creditor does not file a claim against the surety within a year from the date of the deadline for the performance of the obligation secured by the suretyship.

The mortgagor in the case considered by the court was not a debtor under a loan agreement. Further, the mortgage agreement did not set a validity period but the loan agreement did set a loan repayment date (16 August 2019). So, pursuant to Article 367(6) of the Civil Code of the Russian Federation, the mortgage agreement is terminated provided that the creditor does not file a claim against the mortgagor within a year from the date of the deadline for performing the obligations secured by the mortgage under the loan agreement. Also, the bank’s submission to the borrower of a claim dated 11 July 2017 for the early fulfilment of obligations under the loan agreement does not shorten the validity period of the mortgage.

Since the bank filed a claim on 28 May 2019, the pledge in respect of the amount of the outstanding loan set by the loan agreement to mature on 16 August 2019 was not terminated.

Supreme Court of the Russian Federation issues opinion on payment of a fee for the maintenance of the common property of a neighbouring house

In Ruling No. 309-ES21-5387 of 22 July 2021 in the case of a claim from a homeowners’ association (HOA) against the owner of an office building for failure to perform obligations to pay for the maintenance of the common property of an apartment building in the same complex as the office building, the Supreme Court granted the HOA’s claims due to the following:

• the apartment building and the office building have common water supply and heating systems. The residential building’s water supply system is used for the office building to receive utilities, which indicates that the properties’ utility systems are inextricably linked either physically or technologically. The supply of resources to the office building will stop if the office building’s heating and water supply lines are disconnected from the central heating point;
• the office building and the apartment building share a common central heating point;
• according to the design documentation, the apartment building and attached office building were designed as part of a single construction site;
• there is no information about switching to independent water supply or heating, bypassing the central heating point located in the apartment building;
• the previous owner of the office building paid for the maintenance of the common property.

Supreme Court of the Russian Federation rules on return of security deposit after change of owner of premises

The Supreme Court supported a lessee’s claims in its Ruling No. 306-ES21-4034 of 18 June 2021. In this case, a lessee of commercial premises filed suit against a new lessor to recover its security deposit. The court considered that:

• the former lessor ceases to be a party to the lease agreement due to the change of the owner of the leased property;
• the right of the original creditor passes to the new creditor to the extent and on the conditions that existed at the time of the transfer of the right, i.e., the rights securing the performance of the obligation, as well as other rights related to the claim, including the right to interest, pass to the new creditor;
• by law, the buyer of real estate encumbered by a third party’s lease right acquires the entire scope of the rights and obligations of the lessor under the lease agreement and the former owner is no longer a party to the lease relationship;
• generally, the change of one party to a contract without the consent of the other party cannot significantly disadvantage the latter, i.e. the transfer of the lessor’s rights and obligations due to the conclusion of the land sale-purchase agreement between the new and previous lessor cannot make the lessee’s situation worse and deprive him of the right to refund of the security deposit.

Draft Laws

Draft law on the legal status of apartments

Currently, Draft Law No. 1162929-7 “On amendments to the Urban Planning Code of the Russian Federation and certain legislative acts of the Russian Federation regarding the regulation of certain legal relations arising in connection with the construction of multifunctional buildings” (hereinafter “Draft Law No. 1162929-7“) is being considered in the first reading.

The amendments involve, in particular, the introduction of the concept of “multifunctional building“, i.e., a building located outside of a residential development, in a public and business zone, comprising two or more groups of residential and non-residential (commercial) premises supporting a certain process and connected to each other by common areas. At the same time, the residential and non-residential premises of such a building should not be located on the same stair landing, and access to the residential premises by owners and users of the non-residential premises should be restricted.

There are plans to stipulate in the Housing Code of the Russian Federation that residential premises in multifunctional buildings will be managed like apartment buildings, housing and communal services fees will be paid and contributions for major repairs will be made. They will also be subject to housing state, municipal, and public control.

Draft Law No. 1162929-7 provides that a residential apartment in a multifunctional building can be converted to non-residential premises only if all of the apartments on the landing are converted to non-residential premises. The same procedure applies for converting non-residential premises to residential premises. In addition, non-residential premises being converted into residential premises must meet the legal requirements for residential premises.

The current version of Draft Law No. 1162929-7 does not apply to already constructed buildings with apartments.

Amendments to the rules for entering the permitted use of a land plot in the EGRN

On 8 December 2021, Draft Law No. 1153910-7 “On amendments to Article 7 of the Land Code of the Russian Federation and Article 8 of the Federal Law ‘On state registration of real estate’” (hereinafter “Draft Law No. 1153910-7“) was submitted to the State Duma for consideration.

Draft Law No. 1153910-7 was developed in pursuance of Resolution No. 42-P of the Constitutional Court of the Russian Federation of 16 October 2020. The Constitutional Court had ruled that Article 8.8(1) of the Code of Administrative Offences of the Russian Federation did not comply with the Russian Constitution. That was because the existing regulation was unclear in a certain case. In particular, whether the owner (title holder) of a land plot is obliged to enter information about a voluntarily chosen additional permitted use in the EGRN (in addition to the plot’s main permitted use) as a condition for legitimately engaging in that additional permitted use. The unclear regulation also led to uncertainty as to whether administrative action could be taken against the owner for misusing the land plot considering its particular categorisation and permitted use.

Draft Law No. 1153910-7 proposes to add a provision to Article 7(2) of the Land Code of the Russian Federation. The new provision will state that a land plot will be considered to have one or more permitted uses as of the date of information about permitted use(s) is entered in EGRN. It will not be necessary to enter information about a land plot’s additional permitted uses in the EGRN.

[1] Rosreestr Order No. P/0412 of 10 November 2020 “On approval of the classifier of permitted uses of land plots”.

[2] Rosreestr Order No. P/0414 of 16 September 2021 “On amendments to the classifier of permitted uses of land plots approved by Order of the Federal Service for State Registration, Cadastre and Cartography on 10 November 2020, No. P/0412”.

[3] Federal Law No. 148-FZ of 26 May 2021 “On amendments to the Federal Law ‘On state real estate registration’”.

[4] Rosreestr Information dated 28 October 2021 https://rosreestr.gov.ru/press/archive/kak-ispravit-svedeniya-reestra-nedvizhimosti/.

[5] Clause 32 of Rosreestr Order No. P/0241 of 1 June 2021 “On establishing the procedure for keeping the Unified State Register of Real Estate, the form of a special registration inscription on the document expressing the contents of the transaction, the scope of information to be included in the special registration inscription on the document expressing the contents of the transaction, and requirements for completing it, and requirements for the format of the special registration inscription on the document expressing the contents of the transaction in electronic form, and the procedure for changing information on the location of the boundaries of a land plot in the Unified State Register of Real Estate when correcting a registry error”.

[6] Rosreestr Letter No. 14-5897-GE/21 of 30 July 2021 “On the state cadastral registration of amendments due to the reconstruction of parts of linear facilities”.

[7] Russian Government Decree No. 701 of 4 May 2021 “On approval of the Rules for holding a tender for the right to conclude an integrated development agreement, Rules for determining the initial price of a tender for the right to conclude an integrated development agreement when the Russian Federation government decides on integrated development of an area, and rules for concluding an integrated development agreement by holding an electronic tender”.

[8] Russian Government Decree No. 591 of 14 April 2021 “On amendments to Russian Government Decree No. 1260 of 19 August 2020”.

[9] Clause 4 of the Rules for approving the inclusion of land plots for the construction of municipal, transport and social infrastructure facilities within the boundaries of an area subject to integrated development at the initiative of title holders of land plots and/or real estate properties located on them, approved by Russian Government Decree No. 1260 of 19 August 2020.

[10] Russian Government Decree No. 846 of 1 June 2021 “On determining cases of granting subsidies to persons who concluded integrated development agreements of residential areas in accordance with the Urban Development Code of the Russian Federation, to compensate the costs incurred in performing obligations to create or purchase residential premises to provide to citizens relocated from unsafe housing, transfer these residential premises into state or municipal ownership and pay compensation for the withdrawn residential premises in apartment buildings declared unsafe and subject to demolition or reconstruction, for the purpose of implementing the decision on integrated development of a residential housing area in the amount from 25 to 100 percent of the standard cost of resettlement”.

[11] Russian Government Decree No. 815 of 28 May 2021 “On approval of the list of national standards and sets of rules (parts of such standards and sets of rules) the mandatory application of which will ensure compliance with the requirements of the Federal Law ‘Technical Regulations on the safety of buildings and structures’ and on repealing Russian Government Decree No. 985 of 4 July 2020”.

[12] Russian Government Decree No. 985 of 4 July 2020 “On approval of the list of national standards and sets of rules (parts of such standards and sets of rules) the mandatory application of which will ensure compliance with the requirements of the Federal Law ‘Technical Regulations on the safety of buildings and structures’ and on repealing certain acts of the Russian Government”.

[13] Federal Law No. 191-FZ of 11 June 2021 “On amending certain legislative acts of the Russian Federation”.

[14] Federal Law No. 276-FZ of 1 July 2021 “On amendments to the Urban Development Code of the Russian Federation and certain legislative acts of the Russian Federation”.

[15] Article 52.1 of the Urban Development Code of the Russian Federation.

[16] Article 52.1(3) of the Urban Development Code of the Russian Federation.

[17] Article 52.1(2) of the Urban Development Code of the Russian Federation.

[18] Federal Law No. 188-FZ of 11 June 2021 “On amending the Federal Law ‘On the organisation of road traffic in the Russian Federation and on amendments to certain legislative acts of the Russian Federation”.

[19] Russian Government Decree No. 1452 of 23 December 2016 “On the monitoring of prices of construction resources”.

[20] Federal Law No. 305-FZ of 2 July 2021 “On amendments to part one and part two of the Tax Code of the Russian Federation and certain legislative acts of the Russian Federation”.

[21] Russian Government Decree No. 1812 of 22 October 2021 “On amendments to certain acts of the Government of the Russian Federation”.

[22] Order No. 178-r of the Committee on State Control, Use and Protection of Monuments of History and Culture of the Government of St. Petersburg of 8 September 2021.

[23] Law of St. Petersburg No. 327-76 of 7 July 2021 “On amendments to the Law of St. Petersburg ‘On the Procedure for providing a decision to approve the architectural and urban planning appearance of residential construction and non-residential capital  construction facilities”.

[24] Order No. 9-n of the Committee on Urban Planning and Architecture of the Government of St. Petersburg dated 14 September 2021 “On approval of the form and composition of materials for the architectural and urban planning appearance of a residential structure and a non-residential capital construction facility and the Administrative Regulations of the Committee on Urban Planning and Architecture to provide the public service for granting a decision approving the architectural and urban planning appearance of the structures in cases established by St. Petersburg laws”.

[25] Law of St. Petersburg No. 357-85 of 20 July 2021 “On amendments to the Law of St. Petersburg ‘On the procedure for destruction of state-owned property of St. Petersburg’”.

[26] Law of St. Petersburg No. 381-86 of 5 August 2021 “On amendments to the Law of St. Petersburg ‘On Green Areas in St. Petersburg’”.

[27] Law of Moscow No. 15 of 19 May 2021 “On amendments to Article 7 of Law No. 48 of the city of Moscow of 19 December 2007 ‘On land use in the city of Moscow’”.

[28] Article 7(3.2) of Law of Moscow No. 48 of 19 December 2007 “On land use in the city of Moscow”.

[29] Order of the Department of Housing and Communal Services of Moscow No. 01-01-14-155/21 of 8 July 2021 “On approval of the Regulation on the maintenance and routine repair of the common property in an apartment building”.

[30] Order of the Department of Housing and Communal Services and Landscaping of Moscow No. 05-14-381/3 of 2 December 2013 “On approval of the Regulation on the maintenance and routine repair of the common property in an apartment building”.